This viewpoint is further reinforced in the article, “The Sin of Synergy”, Harvard Business Review, March, 2004, Vol. 82 Issue 3, p131:

Strategies are ideas: pure with clean lines. Organizations are things: messy and complex. Executives structuring the deals forget that they are uniting two cultures, which is a fancy word for people. Those people see their lives changing. They become stressed and angry. Some leave. Some under-perform. Some behave badly.

The issues and risks which arise in the pursuit of such synergy opportunities may only become apparent as the dynamic forces which are involved in the effort begin to interact over time. Such insights require both the passage of precious time, sufficient continuity of leadership and purpose, and meaningful measures of effectiveness, to allow such observations to be identified, analyzed, and communicated. Since the presence of these factors is not always apparent, immediately actionable, or effectively mitigated, their associated delays and constraints can erode the likelihood and value of realizing what was originally expected when the synergy initiative was launched.

Additionally, the classic unintended consequences of such endeavors- ignorance, error, immediate interest, basic values, and self-defeating prophecies - can also play havoc with the efforts to achieve the goals that were originally intended. For these reasons, an initial strategy of limited interventions, with active feedback and incorporation of lessons learned, is highly advisable.

As a thought experiment, and with tongue planted firmly in cheek, let’s examine how some of these factors can play out over time. For our thought experiment, let’s hypothesize that a large enterprise is exploring the potential of adopting a standard, off-the-shelf commodity that previously had only been determined regionally. The example commodity we’ll consider for this enterprise-wide standardization, across our pretend business's many sites and product lines, will be the widely used, time-tested social lubricant, beer.

The sidebar on the right provides a narrative of how such a strategy can play out over time, in such an endeavor. As the story highlights, even a simple effort to reach agreement on how to share a common element can quickly take on significant complexity, if underlying constraints are not carefully thought through. 

Luckily, some of these constraints can be envisioned in advance, and associated risks may be mitigated, if sufficient resources and attention are dedicated to this task. Yet in the absence of such mitigation, it is not unusual for these factors to compound and result in impacts that far exceed what one might typically expect.

To highlight how these interactions produce such effects, a causal loop diagram can be used to highlight how some of these factors can interact in such synergy-related activities. Armed with this understanding, it is possible to assign ownership to stakeholders for each of these factors, to develop appropriate interventions to actively manage these concerns. A representative causal loop diagram which depicts some of these factors, and how they might interact over time, can be viewed here.

As this causal loop diagram depicts, there are many classic ‘limits to growth’ archetypes which can arise in these dynamics, including:

• the Tragedy of the Commons, in which low cost access and unrestricted demand for a finite resource ultimately dooms the resource through over-exploitation. This is because while the benefits of shared use accrue to all groups collectively, each individual group is motivated to maximize their own use of the resource to the point in which they become reliant on it. Over time, the costs of this exploitation are borne by all resource consumers, often to the point that a threshold is reached which drives less efficient operations for all. This increases the need for more effective planning across the organization to proactively identify and address such constraints.
• Growth and underinvestment, in which availability of a reinforcing loop factor to drive growth is limited by the capacity of the enabler of growth itself. This then causes the archetype to adopt features of a balancing loop, and become the 'single constraint' which throttles performance of multiple groups.
• Accidental adversaries, in which the two reinforcing loops are balanced by cross-coupling unintended consequences that limits the overall intended cooperative efforts between A and B, even though neither intended this to occur.

Decision-making is clearly at the center of all synergy-related actions. To some degree, faith in synergy rests in the proposition that by centralizing some types of decision-making, the overall efficiency of the system in question will be improved (even though inefficiencies may be added through those additional decision-making layers).

While this value proposition may be achievable given enough time and improvement cycles, capturing these benefits within the context of existing businesses is anything but guaranteed. John Steerman describes how the psychology of such decision-making can be influenced in "The Skeptic's Guide to Computer models

The individual perspectives of the decision-makers may be parochial, the time they have to weigh alternatives insufficient, and the information available to them dated, biased, or incomplete. Furthermore, their decisions can be strongly influenced by authority relations, organizational context, peer pressure, cultural perspective, and selfish motives. Psychologists and organizational observers have identified dozens of different biases that creep into human decision making because of cognitive limitations and organizational pressures (Hogarth 1980; Kahneman, Slovic, and Tversky 1982). As a result, many decisions turn out to be incorrect; choosing the best course of action is just too complicated and difficult a puzzle.

Hamlet exclaims (perhaps ironically) “What a piece of work is a man, how noble in reason, how infinite in faculties...!” But it seems that we, like Hamlet himself, are simply not capable of making error-free decisions that are based on rational models and are uninfluenced by societal and emotional pressures.

Each of these factors can be further impacted by additional natural biases on the part of key stakeholders:

• Overestimating the benefits or underestimating the costs of synergy
• The belief that synergy can only be realized by top-down pressure to cooperate.
• The assumption that the know-how to effectively achieve synergy is available within the organization

These biases collectively make synergy seem more attractive and more easily achievable than it truly is. Turning to Goold and Campbell once again:

The Parable of the Common Beer Initiative

After experiences with a beer game, which consisted of a team-based teaching exercise that provided participants with insights about systems performance, constraints, and supply chain management, senior leadership has decided to begin pursuing the enterprise-wide standardization of processes for company beer acquisition, utilization, and management. To be known collectively as our corporate Beer Strategy (or BS, for short), these governance approaches are being pursued to simultaneously improve productivity, increase morale, facilitate a more efficient use of resources, and promote sharing of best practices.

To pursue these goals, a Beer Operational Synergy System (BOSS) was established to define and communicate the vision, mission, and principles of this initiative. This chartering action helped to frame the goals of the endeavor and establish expected behaviors of the supporting teams. However, given the complex use of beer throughout the organization, the BOSS left the details of beer scope, scenarios of usage, expected demand on the system, and selection of appropriate stakeholders for governance, to the beer consumers. They did feel that as the system were fully operational, it was essential for end users to 'consume BOSS beer as if it were their own'.

Different businesses in this conversation had quite different perspectives. Most were looking for a straightforward adoption of their own prevalent regional preferences, but no single choice would satisfy all needs, and so it quickly became clear that enterprise customization of COTS beers would likely be required. The challenge became determining which particular supplier should provide the baseline from which this customization should proceed from. As a result, a supplier selection was initiated through the Suds Management (SM) organization.

Selection of a set of standard criteria for these evaluation purposes seemed straightforward enough. However, those who were lucky enough to be involved in the initial trade studies quickly discovered how subjective such evaluations can be, and when they realized their own ‘beer of choice’ might not be the final standard. The adopted consensus was to have multiple standards adopted for different situations, but it quickly became evident that one of the key principles of standardization, saving money, might not be realized if multiple standards were indeed adopted.

When efforts to achieve greater rigor were then initiated, however, it quickly becomes evident that selecting the ‘best’ choice can be more about taste than how filling the beverage of choice actually is. It quickly became evident that selected beer suppliers were attempting to 'buy in' to a long-term contract, and promised new features (such as bigger bottles) that would enable their selection to be advantageous. Once the selection was made, however, the details of these features proved evasive, since the details of such commitments had not been clearly established. In parallel, internal customization efforts began in earnest, and involved such adjustments as changes to color, the addition of syrup flavoring (in a tip to the Starbucks crowd), and installation of labeling warning end users that consumption and design should not be performed concurrently.

Such debates paled in comparison to what occurred after a reconciliation of BS and company’s lean practices was attempted. As separate groups began their independent pursuits of the perceived value of this BS, they each attempted to address key integration issues on their own, such as:

• How will customer feedback be incorporated by the BOSS to enable production to be more easily integrated into the enterprise’s value streams?
• How will everyone in the organization adopt the commitment that their job is not only to run the BS business, but also to improve the BS business?
• How will the mix and volume of BS be used to reduce variation for both our internal processes and reduce chaotic surges on suppliers and partners?
• What approach will be taken for proactively keeping BS products and services operating with zero down-time?
• How will mistakes and near misses with BS be embraced to focus corrective actions, and achieve safe and effective workforce consumption?
• How will the BOSS’s inventory be managed to avoid the risks of heat, excess handling, and shelf life?
• In which areas should BOSS vertical integration be focused?
• To what extent will outsourcing of consumption be considered?
• How will supplier partnerships be affected by BS standards?

As solutions to all these issues began to be integrated, the Total Cost of Ownership of the BOSS became evident. Initially, to insulate users from these costs, end-using organizations were not directly billed for their consumption in dollars, but rather were allocated targets based upon 'Suds Consumption Resource Units', or SCRUs. This allowed the real cost of SCRUs to be adjusted independently of end-user consumption. As a result, a targeted end-user objective for beer consumption could never be reliably budgeted for by customers. This unfortunately caused many users to seek out 'alternative sources' for their beer, which led to a broadening, rather than narrowing, of the actual variety of beers in use over time within the target market.

In response to this, the BOSS introduced a series of Beer Reduction Initiatives. None of these were very successful, though many were able to identify large quantities of empty bottles and recycle them for some cost savings. Ultimately, the BOSS determined that the best solution for the observed user reluctance in embracing BS was to ensure that the costs of BS would be spread across all potential users. This was accomplished through a newly instituted 'lip tax', which remains in place today. This tax has increased annually, even as utilization decreased; end-user studies of how this has impacted customer productivity will be performed as soon as additional funding for this purpose can be made available.